Genting Singapore starting to lose grip on mass segment share

Here's why it could do more harm.

According to CIMB, Genting Singapore’s (GENS) 4Q13 earnings disappointed for a third quarter in a row but the underlying trend in VIP growth and higher market share at Resorts World Sentosa (RWS) is positive.

"We still hold the view that GENS’s earnings will bottom out and recover in 2014," CIMB said.

Here's more from CIMB:

One of the key reasons why GENS’s 4Q13 was below expectations was the rate provisioning on VIP receivables.

It nearly doubled to S$56m from a regular run rate of S$30m. Management believes it is being conservative as it wrote off all receivables that were more than 365 days old.

However, this could be a harbinger of further increases in the provisioning rate, revealing a structural bad debt problem in the business.

Although GENS is gaining more of the VIP business, Marina Bay Sands continues to benefit with better mass market numbers due to its location and convention facilities.

Losing market share in the mass segment is not good in the long run because it is a higher-margin business.